Data Demonstrates that Credit Unions Still Beating Banks on Fees

WASHINGTON-The results of a new Bankrate.com survey on checking and ATM fees at large banks and thrifts, when compared with CUNA data on credit union fees, found the non-profits more consumer-friendly. Even as the Federal Deposit Insurance Corporation announced another quarter of record earnings, Bankrate.com released a checking survey finding ATM fees higher than ever and interest-bearing checking accounts not carrying their weight. The fee for using a foreign ATM averages about $2.91 between the charge by your own bank and the owner of the ATM, Bankrate.com discovered. Non-customers on average pay $1.54 for the privilege of using another bank's ATM, while a customer's own bank charges $1.37. Nearly all (96%) of banks charged `foreign' users a fee, which was also a record. In comparison, according to CUNA's 2004-2005 Credit Union Fees Survey, just 71% of credit unions charged members for using ATMs owned by other entities and that total came to $0.98. The average charge by credit unions to nonmembers for using their ATMs averages about $1.40. Additionally, about 67% of credit unions that offer ATM service belong to a surcharge-free network, CUNA said. Bankrate.com suggested using your own bank's ATMs to avoid fees but also noted that surcharge-free alliances are not just for credit unions and smaller banks are beginning to catch on. Some banks have even begun reimbursing customers for foreign ATM usage. By the end of 2005, Bankrate.com estimated that consumers will pay over $4.3 billion in foreign ATM fees. The survey also looked into not sufficient funds (NSF) charges, another high-income fee service. In a rare finding, according to Bankrate.com, bounced-check fees at banks have fallen from $27.13 to $26.90, the second highest the group has recorded since 1998. However, the organization also uncovered that more banks are beginning a tiered system of surcharging for customers that frequently overdraw their accounts. "While the fee for the first bounced check did indeed decline," Bankrate.com said, "on average, what accountholders will increasingly find is that the fee quickly steps up to a higher level if additional checks bounce or the account remains overdrawn into subsequent days." Nearly all credit unions charge not-sufficient-funds fees as well, CUNA's survey found, but are comparatively a bargain at $20.31 on average. And, though interest rates are on the rise, one could hardly tell from an interest-bearing checking account, according to Bankrate.com. The average yield on these accounts right now at banks is 0.31%, up slightly from the record low of 0.27% two years ago. "Even though interest rates are at their highest levels in more than four years, yields on interest checking accounts remain a fraction of what they were in 2001 when the average was 0.79%," Bankrate.com said. "At that time, that was an unheard of low." On top of that the average balance requirement is $2,294, which would yield only $7.11 over one year. However, if the minimum is not maintained, the fee is $10.81 per month; one "slip" could set the accountholder back 18 months, before figuring the tax on the depositor's interest income. According to CUNA, among the 51% of credit unions offering interest-bearing checking accounts, 80% waive the monthly maintenance fee for a minimum monthly balance of $750. At credit unions where the fee can be waived, the monthly charge is $5.48, while unavoidable maintenance fees average $4.53. Additionally, 53% of credit unions offer interest bearing checking accounts with the average minimum to open is $463. -